Study Shows Why People Dislike Carbon Taxes

A carbon tax would be effective and inexpensive – so why do people dislike the idea? A new study provides answers.

Economists agree that a carbon tax is one of the most cost-effective ways to reduce greenhouse gas emissions. And most Europeans want to see stronger policies to address climate change. So naturally, there should be strong support for carbon taxes – right?
No, not at all, according to a new study.

When people in four European countries (Sweden, Spain, Germany, and Poland) were asked to assess 16 different climate policy measures, taxes – particularly carbon taxes and taxes on fossil fuels – were consistently ranked among the least popular. Only new nuclear power plants (though not in Sweden, where new nuclear power landed in the middle) and a ban on the sale of petrol and diesel cars were even more unpopular. Regulations and energy-efficiency standards were significantly more popular, while other bans and subsidies fell somewhere in between.

One explanation for the dislike of taxes is that they are perceived as personally costly, whereas the costs of other measures are less visible. When people expect higher fuel or electricity prices, support drops sharply. But when taxes are described as revenue-neutral – meaning they are offset by lowering other taxes – support increases.

“How a tax is presented clearly plays a major role,” says Malcolm Fairbrother, professor of sociology and researcher at the Institute for Futures Studies, lead author of the study.

The study also shows that political trust plays a decisive role in support for climate policy. People who trust politicians and public institutions are much more likely to support climate measures, including taxes. Those with low trust assume that politicians will waste the money, use it unfairly, or fail to achieve results.

“Opposition to climate policy is not primarily about denying the need for climate action, but rather about mistrust of those in power and doubts about whether the policy actually works,” says Malcolm Fairbrother.

Even people with high trust are, to some extent, sensitive to costs, according to the study, but they are not as easily discouraged by measures perceived as expensive.

“Europeans want climate action, but they do not want to pay very much for it – especially those who lack trust in political elites and institutions,” says Malcolm Fairbrother.

Some conclusions for policymakers from the study:

Build trust:
Trust in institutions is crucial for public support for climate policy. Clearly explain how the policy will work (including how revenues are used in the case of taxes).

Focus on measures that are both popular and effective:
Taxes are generally harder to sell despite their economic advantages. Regulations and efficiency standards, by contrast, tend to be broadly popular and only slightly less effective from an economic perspective. Subsidies are also usually well accepted, even though they are less efficient.

Use taxes with care:
Carbon taxes can work if they are designed fairly and explained clearly. Public support increases if revenues are used to lower other taxes or to fund valued social and environmental programmes.

Contact:
Malcolm Fairbrother, Professor of Sociology and researcher at the Institute for Futures Studies and Uppsala University
Phone: +46 70 331 02 12
Email: [email protected]